The trucking industry has been navigating a less than ideal situation in recent weeks. With a negative change in the net population of carriers and rising diesel prices, the industry is facing significant challenges. However, it’s not all doom and gloom. This article will provide an in-depth analysis of the current state of the freight market, focusing on capacity insights, outbound tender volumes and rejections, spot to contract spread, and specific data for flatbeds, dry vans, and reefers.
Capacity Insights
The trucking industry saw a net loss of 377 carriers last week, indicating a decrease in the overall carrier population. Despite the decrease, the number of new authorities remained stable, albeit lower than in previous weeks. This trend suggests that while some carriers are leaving the market, new ones are stepping in to fill the gap.
Outbound Tender Volumes and Rejections
Freight volumes in the market have been increasing since July 9th, a positive sign for the industry. However, tender rejections, which indicate the amount of freight being pushed to the spot market, have plateaued at 3.17%. This means that only 3.17% of the total freight is being rejected and pushed to the spot market, limiting the potential for spot market volumes.
Spot to Contract Spread
Currently, contract rates are paying 72 cents more on average than the spot market. This gap is slowly closing, but it still means that contract carriers are less motivated to reject freight for better alternatives on the spot market.
Rising Diesel Prices
One of the most concerning trends in the trucking industry is the rising diesel prices. Since around July 10th, diesel prices have been on the rise, reaching an average of $3.97 per gallon as of July 28, 2023. This increase in one of the highest variable expenses for carriers is concerning, especially with spot market rates still decreasing.
Flatbeds, Dry Vans, and Reefers
In terms of specific data, flatbed spot volumes have decreased, leading to more carriers competing for a limited amount of loads. Dry van spot volumes have slightly decreased, but are expected to slowly increase if they continue following the five-year average pattern. Reefer spot volumes saw a tiny increase, following the five-year pattern as well.
However, spot rates for all three categories have been on a decline for consecutive weeks. For instance, reefer rates are at an average of $2.25 per mile, whereas the five-year average is $2.50 per mile.
Yellow Corporation Bankruptcy
Yellow Corporation, a prominent transportation service provider, plans to file for bankruptcy on July 31, 2023. Yellow, as of July 2023, is the fifth largest trucking company in the nation with over 14,000 tractors and over 40,000 trailers. The company’s financial struggles were primarily due to a combination of factors, including high operational costs, increased competition, and a challenging economic environment. Despite its efforts to streamline operations and reduce costs, Yellow Corporation was unable to overcome its financial difficulties, leading to the decision to file for bankruptcy. The company is now working with its creditors and stakeholders to develop a comprehensive restructuring plan that will enable it to emerge from bankruptcy as a more competitive and financially stable business.
Conclusion
The trucking industry is currently facing a challenging situation with decreasing spot rates and rising diesel prices. However, the increase in freight volumes and the slow closing of the gap between spot and contract rates provide some hope. As the industry navigates through these challenges, it’s crucial for carriers to stay informed and adapt to the changing market conditions.
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